Dawnay, Day Sirius acquires two German business parks (DE/UK)

Dawnay, Day Sirius Limited has announced that it has agreed to acquire two freehold business parks for a combined total of €26.15 million. In addition, the company has agreed a new five-year lease extension at its largest site in Bremen with the anchor tenant BAT, the international tobacco group.

In line with the Company's strategy, the two sites being acquired are well suited for upgrading into modern flexible workspaces to be leased predominantly to small and medium sized enterprises (SMEs). The German SME sector has experienced strong improvements and is a key component of the German economy. The company believes that there is currently no other branded operator at a national level of quality flexible workspaces targeting tenants in the SME sector.

The first acquisition is a business park located in Mannheim, 70 kilometres south of Frankfurt, and is one of the largest areas of industry in Germany. The site consists of offices, production facilities and warehouses with a total lettable space of 68,320 m². The occupancy rate is 67.8% and tenants include Bopp & Reuter AVG, a subsidiary of the German IWKA Group. The net rental income is approximately €1.75 million with a net initial yield of 12.95%.

There is approximately 29,000 m² of vacant warehouse and office space which provides the Company with the opportunity to transform and modernise the site to attract new predominantly SME tenants. This will include sub-dividing into flexible workspaces, creation of a conference center and installation of a fitness center to attract local residents. The site also has surplus land which will provide significant future development opportunities.

The second acquisition is a mixed-use commercial site located in Wilhelm-Ruppert Street which consists of production facilities, offices, a hotel and one residential building with three units with a total lettable space of 30,742 m². The site is located in an industrial area of the district Köln-Wahn which has easy access to the motorway and is only five minutes from the Köln-Bonn Airport. The current occupancy rate is 72.1% and is mainly occupied by a large number of small and medium sized enterprises. Net rental income is approximately €0.91 million with a net initial yield 7.13%.

There is approximately 8,576 m² vacant warehouse, office and leisure space. Again, the company intends to transform this area to attract new tenants and provide attractive local facilities. There is an existing fitness center on site.

The company has agreed a five-year lease extension and a rental increase with BAT at Bremen, which is the company's largest site. BAT currently occupies 21,000 m² of space and is the company's anchor tenant. In addition, the company has also agreed a new short-term storage facility lease with BAT on the same site. The storage facility is 8,000 m².

Completion of both acquisitions will take place following satisfaction of standard administrative conditions.

Kevin Oppenheim of the Asset Manager said, "These acquisitions are significant and provide us with an ideal opportunity to modernize and rebrand into vibrant business parks to attract new SME tenants. The sites are well-located in established commercial areas, with scope to generate a significant uplift in rental value. In addition, we have a significant pipeline of further acquisitions and are in active discussions with a number of vendors to acquire similar sites. We are also very pleased that BAT has agreed to extend their lease in Bremen, which we believe reflects positively on the value of the improvements we will make to the site."

Source: Cardew

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